Thursday, November 24, 2016

Block chain finance aka FinTech is almost similar to blockchain technology.

Think of it this way, I want to pay you x amount of this y currency but you are in z country. An example is you are in India paying a supplier in Kashmir Pakistan in Rupees (with bundles of 1000 rupee notes) but the other guy only accept Pakistani Rupees. So how do you do, either you send in smuggled notes, thru Hawala or remit in USDollars which will cost you as much as 20% in fees. Now with Indian Rupees not legal tender, you are in a huge mess.

So now in the cyber world, I will send in Bitcoin or thru paypal, but paypal will still eat 2.5% in exchange fees. In crypto world, there are no fees or very little such as 0.00000001 btc aka 1 satoshi for the transfer, which is shared to the pool. What will happen is you broadcast to the world, say Mr Rajah acct x1234567890asfgh send a digital check to Mr Ali acct 0987654321awawqq for 0.0011 btc and with the fee, starting balance 1.0011 ending balance 1.0000 for Mr Rajah and start balance 0 anf ending balance 0.0011 for Mr Ali.

Everyone on the network copies and concur with the transaction and its sealed to the ledger digital block 123456 digistamp 24nov2016.0000.11 with crc check digits xxggaaccexample created by the miners. Once clear and sealed, no reversal.

So this goes on and on.

The need to pay middlemen are less now as everyone has a copy of every transaction of the chain till this time.

It reduces the cheque, wire fees, transfer fees and time taken.
Banks cut the cost drastically.